(CAIRO) – A fresh wave of scrutiny has emerged over the African Export-Import Bank (Afreximbank) after international credit rating agency Moody’s downgraded the bank’s long term credit rating, citing concerns over sovereign lending to several African countries including South Sudan.
Moody’s Investors Service announced it had cut Afreximbank’s long term issuer and senior unsecured ratings from Baa1 to Baa2. While the outlook has been revised from negative to stable, the downgrade reflects growing risks in the bank’s loan book, especially loans to financially strained governments such as those of South Sudan, Ghana and Zambia.
Although Moody’s did not name South Sudan directly in its official summary, a Nigerian business magazine noted that recent debates surrounding the classification of loan restructuring deals with Juba have been part of the broader concerns driving caution among global rating firms.
The African Peer Review Mechanism (APRM), a continental governance monitoring body under the African Union, strongly contested the narrative laid out by Fitch Ratings last month, when Fitch similarly downgraded Afreximbank and estimated its non performing loans at 7.1% of total lending, above its 6% “high risk” threshold.
In particular, APRM accused Fitch of misrepresenting South Sudan’s request to restructure certain loan repayments by labelling them as defaults. According to APRM, these transactions were consistent with the terms of Afreximbank’s founding treaty of 1993, which allows for sovereign flexibility in periods of economic distress.
Afreximbank has served as one of the few reliable lenders for South Sudan, providing credit to support critical imports, infrastructure and trade related finance at a time when most global lenders have limited exposure to the country due to ongoing macroeconomic and political volatility.
The Moody’s downgrade could, however, increase borrowing costs for Afreximbank, making it harder to offer low interest loans to vulnerable countries like South Sudan.
The downgrade also signals reduced investor confidence in the bank’s sovereign risk management, with implications for its future fundraising capacity on international markets.
Moody’s justified its downgrade on the grounds of weakened asset performance and increased risk from lending to nations with unstable fiscal environments.
The agency stated that a sustained improvement in capital strength, asset quality and market access would be necessary to reverse the downgrade in the future.
For Juba, this development adds to an already complex economic picture. The South Sudanese Pound (SSP) continues to face pressure, with the official rate standing at around SSP 4,600 to $1 as of July 2025.
Government ministries and local businesses that rely on Afreximbank loans for equipment, roadworks, energy supplies and trade financing may see delays or cost increases if the bank tightens its lending criteria in response to the downgrade.
However, according to the APRM, Fitch failed to distinguish between non performing loans and structured rescheduling agreements, a distinction that is especially relevant for conflict affected or recovering economies like South Sudan. The APRM argued that restructured loans should not automatically be viewed as defaults, particularly when made under negotiated terms between the lender and the sovereign state.
The issue is not purely technical. Global credit ratings influence Afreximbank’s ability to raise capital affordably on global markets. A lower rating means higher interest rates for the bank, which it may pass on to borrowers, potentially pricing out countries like South Sudan from much needed development finance.
South Sudan’s reliance on Afreximbank has increased in recent years due to a lack of access to concessional loans from multilateral lenders like the World Bank and International Monetary Fund, both of which have stricter conditions and require deeper reforms.
A financial analyst in Addis Ababa (where the African Union is headquartered) suggested the Fitch and Moody’s downgrades may reignite calls for Africa to develop independent credit assessment systems better tailored to the continent’s development realities.
